Tuesday, November 16, 2004

The Customer is Always Right... But Only When We Say So

The Wall Street Journal reports that Best Buy is planning to divide its customer base into groups of those whose buying practices help shore up the company's bottom line ("angels") and less profitable, higher maintenance ones ("devils"). If you buy items at list price, never return products and don't take advantage of rebates (i.e. an impulse buyer), you're an "angel." But if you're a bargain-hunter who makes Best Buy honor its lowest-price pledge (i.e. a savvy consumer), you're a "devil."

Best Buy's strategy will be to purge its customer base of "devils."

This strategy is not new, but it's radical for a discount retailer... especially one that's locked in a mortal struggle with fellow "big box" discounters Circuit City, Target and Wal-Mart. Exactly how Best Buy plans to do this remains unclear, but it could include charging fees for returns and selling only high-end, high-profit merchandise.

In this age of increased competition, such a strategy seems foolhardy. Open contempt for one's customers goes against every tenet of conventional business thought, especially since those "devils" are simply following store policy. If you're willing to pay top dollar for electronics, after all, why not shop at your local "mom and pop" dealer (remember them?) But if Best Buy does pull it off, it will mark a new era in retailing. And it will effectively change Best Buy from a big-box discounter into something different. But will it remain a place where people will want to continue doing business?

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